We heard from Mark Carney at the Bank of England yesterday with some disappointing news of an 8 to 1 decision to keep interest rates where they are. Markets had been trading in anticipation for a rate cut from 0.5% to 0.25%.
The decision to keep interest rates where they are clearly reflects the Monetary Policy Committee’s requirement for more time to assess the economic impacts of Brexit. During their meeting yesterday, it was stated that “most members of the Committee expect monetary policy to be loosened in August”. This will be released alongside the August Inflation Report, which will include updated economic forecasts.
Following the market events, Sterling made gains of over 1.5% on the day against the euro and dollar.
Referendum impacts still hard to predict
On the corporate side, FirstGroup stated that group revenue during the first quarter has decreased by 1.4% in constant currency while it can’t yet predict the impact of the referendum. This just shows the level of uncertainty within the corporate world and how it has rocked the currency markets.
More data from June to come
Over the day, we can expect to see Eurozone trade balance data (May) and the consumer price index (June), followed by Carney speaking again at 1pm. We’ll also have retail sales data and consumer price index for June to follow at 1:30PM. Today could be another volatile day for markets to really set the stance for the open again of next week.